Economy

After what has seemed like years of asking “Thing are bound to get better, right?” the job market is finally, undoubtedly warming up for business school graduates. Earlier this week the Graduate Management Admission Council (GMAC) released a pair of annual international surveys that show that the Class of 2011 is having an easier time landing jobs than grads of recent years, and that employers are bullish on their future hiring plans.

Perhaps the purest litmus test is the percentage of job-seeking students who land jobs before they graduate. Here we see a definite improvement in the 2011 GMAC Global Management Education Graduate Survey results, with 54% of students reporting they had at least one job offer in March (when the survey was conducted), compared to just 32% of those surveyed at the same time last year. For full-time, two-year MBA students, this number is the highest it’s been since 2008.Continue reading “More Good News on the Job Front for MBA Grads”→

This recent grad is willing to calculate CAPM for food.Could the job market finally be thawing for MBA graduates? It is at least a little bit, according to new survey results that the Graduate Management Admission Council (GMAC) released last week. Eighty-eight percent of the grads who responded to the survey reported being employed after graduation, compared to 84% of survey respondents in 2009. The salary picture also improved: 2010 graduates reported a median starting salary of $78,820 (U.S.), up from $75,000 for those who graduated in 2009.Continue reading “Job Prospects Get Better for MBA Graduates”→

Recently the Graduate Management Admission Council (GMAC) released its annual report analyzing admissions trends at business schools around the world. Interestingly, while most of us tend to associate a weak economy with ever-rising applicant numbers, that trend seems to have sputtered out for the current recession.

According to the GMAC report, half of the 665 graduate management programs surveyed reported an increase in application numbers, while about 40% actually reported a decrease in applications, compared to the previous year. So, have people finally given up on the MBA as a fallback option when the economy gets soft?

That may partly be true, although a more realistic answer is that, since this particular recession has lasted longer than most, it’s tapped out as a source for additional applicants. Normally the first year after a recession hits is when schools see the largest surge in applications, when a little “pent-up demand” for advanced degrees gets released and people look for additional options as the job market gets soft. At any given time, there are thousands of applicants who are one the fence about applying. Some of them keep saying “Maybe next year” and never actually apply, while some who were about to say “Maybe next year” see their job prospects getting worse and say, “I’d better take the GMAT and start working on applying to business school.”

As these “Maybe next year” applicants come off the sidelines, they pile on top of the normal wave of applicants that passes through business school every year — the typical young professionals who are three to five years out of college and are ready to pursue an MBA. Add it all up, and you have an abnormally large applicant pool. But, this pool of “fence sitters” only runs so deep, and it essentially gets tapped out after one or two application cycles. That’s probably what we’re seeing now.

This is especially true for more general two-year management programs, which are often the most inviting for “fence sitters.” According to the GMAC report:

More two-year full-time programs (49 percent) showed a decrease than an increase (41 percent) in application volume, continuing declines seen in 2009. In both the US and Asia-Pacific region, where most full-time programs are two-year, roughly four out of 10 full-time programs saw increases. Fifty-three percent of US full-time programs reported application declines.

Meanwhile, more specialized programs, which tend to be less inviting to the more casual “Will I or won’t I?” applicant, reported a healthy rise in application numbers overall:

More than 60 percent of master-level programs in finance, accounting, and management, which traditionally draw younger students than MBA programs, reported application increases, with the average volume increasing last year by 20 percent or more.

If you’re applying to business school this year, what does this mean for you? Not a whole lot, as we wrote last month, although applicants always like to hear that they have less competition, not more. As the economy eventually (hopefully?!?) improves, application numbers will likely continue to decline, as that pool of “fence sitters” re-stocks itself for the next recession, which will come sooner or later.

The blogging world has been abuzz over the “Unemployed JD” scandal that broke out this week. In case you missed it, a blogger named Ethan Haines who runs a blog dedicated to crusading for better transparency on the part of law school when it comes to employment data, actually turned out to be Denver-based Zenovia Evans, an employed 28-year-old graduate of Cooley Law School in Michigan.

While everyone is more hung up on on the fact that Evans tried to rally people around a cause in a disingenuous way, we think that the assumptions behind her demands are somewhat misguided. When Evans (posing as Ethan Haines, an unemployed JD) contacted 10 law schools and told them about “his” crusade, he asked them to commit to new standards of transparency on their job placement statistics and to agree to letting Haines audit their career counseling programs.

Those standards came from another group, calling itself Law School Transparency, which maintains that by misrepresenting or under-reporting their job placement stats, law school essentially dupe students into enrolling under the false impression they will inevitably land lucrative jobs.

Even if Haines/Evans/whatever-we’re-calling-her-now got her way, we’re not sure that it would make much of a difference. We don’t want to give it all away yet, but in a recent survey of law school applicants that Veritas Prep conducted in partnership with Law School Podcaster and PreLaw Magazine, an overwhelming percentage (81%) of respondents said that they would still apply to law school now even if a significant number of law school graduates were unable to find jobs in their desired fields! Further, only 4% said they would not apply to law school at all if they knew job prospects that bad. (We will share the full results of the survey shortly!)

While we certainly will join the crusade against any school that deliberately misleads people and tricks them into applying (*cough*… for-profit online schools, we’re looking your way…), even if schools replaced their glossy web sites with black & white photos of somber, jobless grads, we actually think that many would-be applicants would still apply to law school.

Why? We answer that question with another one: Why not? The reality is that, for many young people, law school (and business school, to some extent) has become an inevitable weight station on the road to real life. Is the economy in shambles? Great! Even more reason to hide out in grad school for two or three years. While the obvious downside is that many of those students will graduate with a nearly insurmountable amount of debt, most of them don’t see it that way. Either Mom and Dad will pick up the tab, or the applicant assumes that the economy will inevitably be better in a couple of years, or they would just not rather think about it today. (Or, even better, maybe Uncle Sam will bail us all out one day! That would be a hoot.)

Don’t get us wrong… Transparency is always a good thing. We’re glad that publications such as U.S. News have recently taken a stand against law schools gaming the rankings by deliberately withholding their employment data. But, for better or worse, we predict young people will keep applying to law school in droves.

Despite an employment environment that remains stubborn, new MBA grads are growing more confident about the economy, according to a new survey released by GMAC this week. Somewhat surprisingly, this increase in optimism actually comes despite a drop in the percentage of grads who have jobs compared to last year.

According to the latest GMAC Graduate Management Education Graduate Survey, the percentage of full-time two-year MBA program grads who had an offer of employment prior to finishing school dropped to 40% this year, down from 50% in 2009. The numbers are even worse for part-time MBAs: 22% of part-time grads had a job offer before graduation, down from 38% in 2009.

Despite these gloomy numbers, about one-third of grads who said they felt the global economy is stable or strong, up from just 9% a year ago. So, what gives? How could optimism bounce back while the job picture actually gets worse by some measures?

GMAC’s news release was mostly mum on this matter, although it may simply be a matter of “bad news fatigue,” and our tendency to doubt that things can stay this bad for that long. Hardly any MBA grads (other than perhaps a handful of older part-time MBAs) are old enough to remember the last time the U.S. or global economy last went through an extended rough patch, in the late 1970s. So, for most of these grads, two years into a recession, one can’t help but ask, “This thing has to be over soon, doesn’t it?”

That’s just one theory. It could also be that they’re going on more than just faith. They may notice that more companies are returning to campuses to interact with students, even if the job offers aren’t yet flowing more yet. GMAC echoed this idea in its announcement, mentioning that the increased optimism among graduates mirrors the trend highlighted in the GMAC Corporate Recruiters Survey, which found that employers are finally shifting their attention back to expanding their businesses.

Last week the Graduate Management Admission Council (GMAC) announced the results of a new employer survey that suggests that while the job market for MBA grads is still rough, we may finally see the light at the end of the tunnel. The reason for the optimism? The percentage of employers planning to hire MBA is up this year compared with 2009, although the number of new hires per company is expected to decline slightly.

After a sharp drop in stated hiring intentions last year (down to 50%), in this year’s survey about 55% of employers who participated in the GMAC Corporate Recruiters Survey said they planned to hire new MBA grads this year. What may be even more promising for the job market is that employers also indicated they may finally be shifting away from cost-cutting in favor of trying to grow their businesses again.

In a statement that accompanied the release of the survey results, GMAC President Dave Wilson said:

“Employers have spoken clearly. The intrinsic value they place on the skills people develop in business school does not rise and fall just because the economy does. Management talent is always critical to the well-being of any organization, and as conditions improve, employers will find ways to acquire more of that talent.”

So, if you’re in business school now or plan to apply to an MBA program this year, you may actually land a good job when you graduate, after all. However, it may take a while for MBA grads’ salaries to start growing again. A separate GMAC survey found that only 40% of full-time, two-year MBA program graduates had at least one job offer before finishing school, down from 50% in 2009. And, the number of job offers reported by the grads who participated in this study declined by about 13% from the previous year. (By the way, our 100% free Annual Reports provide job placement info and much more, for 15 of the world’s top MBA programs.)

So, although companies are saying the right things, there still remains a large number of new and and recent grads looking for MBA-level work. As long as that glut of talent is out there, salaries for new MBA grads probably won’t grow much. But, “Will I get a job??” is still the primary question on most business school students’ minds, and for the first time in a while, the answer to this question looks to be turning toward the affirmative.

(Today’s “Lonely Traveler of the Week” post comes from our own Ash Z., who is currently stuck in Berlin as he tries to successfully battle Iceland’s Eyjafjallajokull volcano and make his way back to the States before the month is through.)

I rarely post on this blog which I helped create. In fact, I find it far more satisfying to allow those more brilliant than myself to honor the pages of this simple blog with the wisdom of their words. (You forgot to mention “more handsome,” too. — Ed.) And it’s exactly this hands-offish philosophy that has made this one of the the best blogs on graduate school admissions available on the web. However, in a moment of inspiration (sheer boredom), I’ve decided to share some of my insights about this wonderful Ash Cloud that has grounded our 21st century sensibilities by making air travel in Northern Europe impossible.

You see, I’m just another statistic: one of the tens of thousands of travelers grounded by this natural disaster. And, as beautiful as Berlin is, limbo is hideous. For days I’ve had no idea when I would be getting back to my life, my work (Veritas Prep), my family, or my friends. After days of promises about “tomorrow” from various sources, I realized that tomorrow never comes; I would have to change my plans and realize my own tomorrow. But that’s not the only realization I was forced to have. I also realized something very interesting about this whole exercise: Ultimately, this entire experience has been a case study in the sunk cost dillema.

Every morning I rise to the lovely sounds of my wake up call, splash some water on my face, take in the sounds of the Berlin streets from my window, call the airlines, and make a very simple decision: Do I trust my sources when they say that the airports will open tomorrow, or do I take my destiny into my own hands and rearrange my schedule, at a huge financial loss, and create a new path back to the states? The problem is that it’s very simple for me to fall prey to my own instincts and start taking into account all of my sunk cost: the cost of the time I’ve already incurred and cannot be recovered. In fact, it seems to me that the majority of the people who have been stuck in this horrendous situation have also been stuck with the same dilemma.

Shall we stay at the airport one more day, or do we find another route home? I suppose it’s human to value the time you’ve spent waiting, even if it has no effect on future events. Me, I decided to make other plans. Now I can spend the next few days in transit, pondering the effects of a natural disaster on 21st century conditioning. Maybe my time isn’t as valuable as I thought. Maybe travel should not be so accessible. Maybe I need to get some sleep.

Recently the Yale Daily News ran an article about how the Yale SOM alumni network has matured to the point where current students benefit from the wide variety of Yale alumni across industries. This is notable since the school has only been around since 1976 — making it a spring chicken compared to most top MBA programs.

However, as good as that news is for Yale students, what we found even more impressive is how the school’s own administration — all the way up to Dean Sharon Oster — hasn’t hesitated to make personal appeals to the school’s alumni and supporters, in the name of helping students find jobs in a tough economy.

According to the Yale Daily News:

In an e-mail to all SOM alumni, Oster called on the school’s graduates to step up and help current students, recent graduates and even other alumni seeking jobs and internships.

“Although the economy seems to be showing signs of improvement, most of my faculty colleagues agree that we’re not out of the woods yet,” Oster wrote in the e-mail. “The strength of the SOM community is most visible in times of adversity, and so I am writing to you now to tap into some of that strength.”

Within a few hours, Oster had received hundreds of responses.

We love this kind of commitment to helping Yale students find jobs. After all, as important as a student’s two years in the classroom are, at least as important are the professional opportunities that an MBA opens up for that student. Some schools were a little slow to remember this (in our opinion) as the economy started to sink in 2008, but it’s great to see that this is not the case in 2010.

In a recent Reuters article, MIT Sloan students had a rather optimistic outlook on the job market, considering how gloomy it has been for the past couple of years. As they returned from their annual “Tech Treck” job trips, in which they visit employers all over the United States, students expressed that they think the worst of the bad job market is behind us.

It sounds as though companies — especially the more tech-oriented ones that Sloan students visit — could finally start hiring again this year. While it will likely be a while before companies again start hiring at the levels that MIT Sloan and other top business schools have grown accustomed to, it sounds like the trend is clearly positive.

According to the article:

“Our MBAs are unbowed, and they came back with a lot of gusto,” said Sloan adviser Paul Denning, who has made the trek to California for several years. “The general consensus is that things are better, particularly in Silicon Valley.”

Like those of other top business schools, MIT Sloan graduates find themselves choosing among multiple six-figure job offers, but that changed last year, when even healthy and growing companies such as Google significantly cut back on the number of Sloan grads that it hired. Now, as companies expect demand to warm up and some spot opportunities that they will need managerial talent to go after, grads at Sloan and other top business schools can expect the job offers to start flowing again, at least more than they did last year.

For MBA students who will graduate this year, many of whom still hope to land jobs before they graduate this spring, the news that some companies are ready to hire again is obviously a very welcome sign. It’s even better news for the Class of 2011, though — assuming they can find some sort of meaningful internship work this coming summer, they still have at least a year’s more time for the economy to warm up again before they they need to find full-time work. And, the job market for today’s applicants (the Class of 2012) looks even rosier, assuming that a steady thaw continues.

For more advice on your own candidacy for MIT Sloan or any other top business school, call the MBA admissions experts at Veritas Prep at (800) 925-7737, and we’ll gladly give you an initial assessment of your candidacy!

In an article on Forbes.com yesterday, Deb Weinstein reports that jobless grads are increasingly turning to grad school as a backup option in the face of dismal job prospects, even though some of their possible post-school job prospects are also disappearing.

As we’ve reported here before, both of the GRE and the GMAT have seen growth in the number of tests taken in the U.S. over the past year — 13% and 4.9%, respectively. (Some of that GRE growth may have come from more business schools increasingly accepting the GRE.) Even more impressively, the LSAT saw a 20% jump in the number of tests taken in 2009 vs. 2008. This comes while some big law firms are actually paying their new hires to take a year off.

But the growth doesn’t stop there. Even journalism schools have seen record numbers of applications this past year, even as the publishing industry has shed 90,000 jobs and more than 100 newspapers have shut down. Why would these people all rush back to school now?

The obvious answer is that, although their job prospects may not be especially bright when they graduate, these young grads would rather take their chances in the job market in two or three years, rather than now. Even if the job market isn’t significantly better in 2012, then at least these folks will come out of school armed with additional skills, certifications, and contacts, making their reentry into the job market a little easier (at least in theory).

Also, human nature steers us toward a “I’ll worry about it later” mentality — even if they don’t end up being any better off in a couple of years, at least getting into grad school will give these young people the luxury of being able to hide out on campus and not quite yet have to face the real world. Sometimes, especially when the economy is rough, this can be grad school’s biggest appeal (especially when Mom and Dad pay for it!).

If you’re thinking about graduate school and want more help in getting into business school, law school, or medical school, call us at (800) 925-7737 and speak with a Veritas Prep admissions expert today!

Due to the current state of affairs with the economy, many people have been questioning business school programs. Can we blame them for our economic woes? Should they have done more (or less?) to help us avoid the situation? Do they need to be changed/fixed? Is that even possible? Are they even relevant any more?In light of such questioning, the Harvard Business Review has begun an online discussion with many experts weighing in. The disucssion is already underway, with two articles (and one audio opinion) having been posted.

I expect this to be an interesting debate, with many different opinions and suggestions coming forth, and I encourage all of our readers to check it out. You can view the articles here (just keep in mind that the articles are listed with the most recent at top). And as always, we’d love to read your opinions on the matter in the comments section.

For more information about business education and MBA admissions, visit Veritas Prep.

Last week, Nathan Koppel of the Wall Street Journal wrote a thoughtful piece about young professionals retreating to law school as a form of safe harbor in the current economic climate. The column explored both sides of the issue, offering both reasons for and against going back to law school. While I agreed with much of it, I also felt that a great deal of analysis –- and more importantly, critical advice -– was missing from the article.

Again, I want to stress that Koppel’s take on this issue was fundamentally solid and that he presented the issue without much by way of an obvious agenda. That said, the first aspect of the column with which I take issue was his use of statistics. To put it bluntly, I believe he cherry-picked his “application increase” stats around which to build the story, citing Washington and Lee (29% increase), Yale (8%) and Texas (8%) as proof of a massive migration. However, as we wrote a while back, the ABA reported only a 1% increase in applications across the board this year. So again, I don’t think there has been quite the “retreat!” mentality that Koppel makes it out to be. Of course, that may just make the underlying question — Is heading to law school right now a good move? — all the more relevant because that small increase for this year is a harbinger of a huge increase next year. (See that same blog article for an analysis of the 2001 recession that saw a very small spike that year followed by 17% increase in 2002 applications.)

As to whether or not going to law school at this time is a good idea, I am more on the “yes” side of the fence than I am down the middle. With that in mind, here are key considerations that were either missing from the column or were not explored in great enough depth:

Safe Harbor. For starters, law school lasts three years, so the “hide out” argument could be bolstered by the fact that it gives students longer to ride out the recession. I think Koppel missed an easy chance to compare MBA students (who only get two years) and to introduce the notion of a JD/MBA degree, which provides even more of a diversified skill set and, depending on the school, can allow a student to ride out a down economy for four years. Even the most skeptical among us likely believe that things will be better four years from now — especially in the legal markets, where transactional attorneys will be in great demand once lending starts up again. In fact, when that day comes, there simply won’t be nearly enough junior and mid-level attorneys to draft all the documents that will be needed to support those deals. I could see a major corporate associate hiring boom in the next two-to-four years when lending kicks back in throughout the financial markets (commercial real estate, not so much, but that is beside the point).

New Jobs. I also think Koppel missed an “emerging industries” angle with regard to financial regulation (which would have been a perfect transition from talking about JD/MBA degrees and their value) and corporate governance. Given the clear cause of the economic crisis and the reform being called for by the Obama administration, I believe there are going to be a plethora of new legal jobs in the regulatory sector — both within governmental agencies (existing bodies like the SEC and possibly those that have yet to be formed) and within companies and law firms as well.

Alternative Career Path. One additional angle that Koppel went for in the column was some advice on how a graduating law student can prop himself up in a down job market. Not to beat a dead horse, but he missed a few things here as well. Koppel got the “elite school” thing right when he discussed the impact that graduating from a top 14 law school has on one’s prospects with BigLaw, but when he wrote about pursuing a non-legal job, he made it sound way too easy.

In fact, this part of Koppel’s article would have been the ideal place to drop in some of the soundest advice a prospective law student could ever receive: start your alternative career path while in law school. Too many law students make the mistake of assuming they can just waltz out of an elite law school with a JD and get whatever job they want, in whatever industry they want. And while a JD does signal certain things (critical thinking, strong writing skills, work ethic, problem solving) that can make a law school grad immediately attractive in particular industries such as management consulting, it doesn’t help much at all in the wide majority of industries who naively see law school as “lawyer training.” Never mind that this isn’t really true; that’s the perception.

So a law student who wants to work for an NBA team, or in business development for Warner Brothers, or for a hedge fund (or name your industry/company) can’t simply go take summer jobs at big law firms, graduate, and then send out their resumes. Yes, those summer associate gigs pay a mint, but they put law students on a straight-line path with 20-foot walls towards working at a big law firm. If a law student really wants to work for Warner Brothers, that person has to spend her summers working there for free or for cheap, so that the big guns at Warner Brothers get to know her and value her and desperately want her to work there. Then, when she graduates with her prestigious law degree, they have to pay her and position her accordingly. That is how it works for “alternative” career paths.

And I just desperately wish people would tell prospective students this reality. Maybe the Wall Street Journal wasn’t interested in that type of social good or perhaps Koppel didn’t even think of this or know about this reality, but this article would have presented a perfect opportunity to broadcast an important message.

The Money Game. The only other thing I would have put in this article is that students should be more cognizant of the financial aspects of their law school choices. With an uncertain job market at the other end of the pipeline, it is no longer a cavalier thing to take out $150,000 in debt to obtain an elite law degree. In 2004, I would have been crazy to go to Duke for $70,000 rather than Chicago for $150,000. Now, in 2008? I’d probably be crazy to do the opposite. Schools are leveraging each other right now too, so it is a good time to pay attention to trends (this year Michigan appears to be the big spender) and also to barter with the schools.

All of this signifies a sea change in the selection/enrollment process. Until now, I would have told a student to pick among the top 14 law schools in this order:

1) fit
2) rank/prestige
3) cost.

Now, under these market conditions, I would change the order to:

1) cost
2) fit
3) rank/prestige.

In my humble opinion, it is far better to go to Cornell and have $50,000 in debt than go to NYU and carry $120,000 in student loans, when it might not matter much with regard to job prospects. Either the deals are going to start happening by the time you graduate (in which case you can get a great job from either school), or they’re not (in which case you might be trouble coming from either school). This is now a major consideration. Put another way: students have to consider law school a little more like undergrad with regard to their cost versus return on investment (ROI) analysis.

All in all, Koppel’s article got some key issues out on the table and will get people talking. That’s the most important thing. I simply wish the analysis had gone deeper and that some key and useful messages would have been delivered to the confused law students and prospective law students who need that information so badly.

To get more law school admissions news and analysis from Veritas Prep, be sure to follow us on Twitter.

As you may have read earlier this week in the Wall Street Journal article linked to this space, business school applications are expected to peak this year by a larger margin than at any other point in history. With the impending competition for slots in top schools compounded by uncertain job security throughout the global economy, MBA admissions consultants and GMAT instructors like me are in the unfamiliar position experienced most by rock stars and Broadway performers – “extended by popular demand”.

To assist the multitude of potential MBA applicants who need to put together applications in short order before the January deadlines, Veritas Prep has just announced the addition of new end-of-2008 course schedules from coast to coast:

Beginning on Monday, November 3 in Beverly Hills, California, Veritas Prep will run an additional 42-hour Full Course schedule (Monday/Wednesday, 7 to 10 p.m.)

Beginning on Saturday, December 13, Veritas Prep will run an additional 36-hour Weekend Course Schedule in New York City (Midtown Manhattan location)

For information on these and the dozens of other Veritas Prep GMAT prep courses that are scheduled to begin in the upcoming weeks — including a worldwide round of Full Course offerings beginning the final week of October — take a look at our GMAT course schedule options.

An article in today’s Wall Street Journal (“Escape Route: Seeking Refuge in an M.B.A. Program”) looked more deeply into the trend of people turning to graduate school as the economy slows. Veritas Prep was mentioned as one of the GMAT prep and admissions consulting firms that has recently seen tremendous growth because of the softening economy and Wall Street turmoil.

While this trend has been covered a great deal lately, this piece raises an interesting question: If more people pursue their MBAs now but the Wall Street landscape looks dramatically different in three years, where will those grads go? According to the article:

But the severity of the financial crisis and the demise and consolidation of financial powerhouses that in previous years have nabbed top talent at schools across the country make this year’s flight to business school different. When this year’s M.B.A. applicants graduate, they will enter a dramatically different Wall Street and potentially smaller job market that has been altered by the ripple effects of the credit crunch.

“The demand for managing money and the demand for banking skills, that’s going to be here,” says Stacey Kole, deputy dean for the full-time M.B.A. program at the University of Chicago Graduate School of Business. But “it may migrate to different firms.” Ms. Kole says the school is seeing more boutique firms recruit on campus, as well as employers in other sectors recruiting for finance jobs. “People who may have gone to Wall Street will go to Main Street in a finance role,” she says.

Business schools aren’t the only ones that may see an increase in application because of the economy. According to the Law School Admission Council, this past June there were 28,939 LSATs administered in June, representing a 15.3% increase from a year ago.

Perhaps most concerning is the effect that the current market may have on student loans. Some lenders (such as Citi) have already suspended loan programs, while others are tightening their lending standards. It remains to be seen how much of an impact this trend will have on the overall graduate school admissions landscape.

If you’re just now thinking about applying to business school or law school this year, take a look at Veritas Prep’s industry-leading admissions consulting team.

Obviously, the hottest topic in the United States at this time is the proposed $700 billion financial market bailout, forwarded by Treasury Secretary Henry Paulson and the Bush administration on September 18. According to CNN, Congress is currently closing in on an agreed structure for the bailout and may in fact finalize the terms by the time you read this post. Obviously, the names have been huge and have transcended the interest level of Wall Streeters and market insiders to become the critical issue of the day. To date, bailouts have been engineered for Bear Stearns, mortgage holders, AIG, Fannie Mac, and Freddie Mac. This doesn’t even account for the $153 billion spent on the economic stimulus package or the nearly $300 billion in farm subsidies from earlier in the year. Next up – the entire financial industry. Click on any political or news website or blog, flip a channel, grab a newspaper and you can read and hear all about it.

But what does it all mean for the clients of Veritas Prep and of other “business school preparation” companies? The short answer is: it means a lot. The long answer is that you have to break it down into a series of key issues. Some of the issues are relatively obvious, short-term in nature, and warrant high priority consideration given the type of investment one makes when pursuing a graduate degree. Other issues are less obvious at this time and tend to have big picture implications.

Issue #1 – The recession push goes into hyperdrive. For companies specializing in preparation for MBA programs, there is almost always going to be an increase in demand in a downturn. Most businesses slow down in a recession, but education firms typically see an acceleration under such market conditions. For GMAT prep and MBA admissions consulting companies everywhere, 2008 was probably already a busy year given the recession and the likely application spike that typically accompanies such an economic climate. One simplified reason for this is that when the market takes a downturn, an advanced degree becomes a more attractive option to young professionals. Not only is there an opportunity to “ride out” a bad market, but the business school graduate almost certainly comes out on the other side with advanced skills, an improved network, and increased earning potential.

When key financial firms recently started collapsing and bailouts became commonplace, a recession climate escalated into the current financial crisis. What happens next? More than likely, the increased application activity at business schools and business school companies will spike even further. In addition to the draw, or “pull” of an MBA during a bad market cycle, now there is a “push” in the form of all the suddenly unemployed and displaced young professionals in the finance industries (and other affected industries). For many people, the MBA has gone from being merely an attractive option to an absolute necessity.

Issue #2 – The end game expectations must shift. The byproduct of this increased activity is that business school applicants must analyze eventual career prospects through a new lens. Those being “pushed” into the MBA arena surely must understand that the career path of former, enviable colleagues is likely to be unavailable. The financial sector – the same quadrant of the business school job market that is driving estimates of accelerated admissions numbers – will not look the same in two, three, or four years as it did even just a few weeks ago. This means that a significant MBA cycle (business major, analyst job on Wall Street, MBA from high profile program, banking job on Wall Street) has been disrupted if not broken altogether. This has an impact on everything from applications (how to explain short and long term goals when the goal just disappeared?) to summer jobs to recruiting to possible overcrowding in other job markets. And it isn’t just finance professionals who will be impacted. MBAs seeking careers in industries such as management consulting, health care, tech, media, product marketing, and operations will now likely face increased competition from peers who otherwise would have pursued employment at investment banks, hedge funds, and private equity firms. And if we are to make a further leap and presume (as many do) that those financial job seekers are comprised of an uncommonly high percentage of top business school students, then competition is increased all the more by the additional quality, as well as quantity, introduced into these other markets. This leads directly into the next issue.

Issue #3 – New avenues should be considered. When analyzing the impact of the bailout on MBA applicants, most of the focus is centered on the two issues above. Less prominent is the discussion of how other programs are impacted, or how they might impact young professionals. In particular, law school becomes an almost necessary consideration for a young professional previously considering applying only to business school. Not so long ago, a law degree – and the earning potential, social prestige, and community standing that came with it – was the most desirable higher education program available to a young, ambitious, business-minded professional. In recent years, the law degree has lost some of its luster as a crown jewel of the financial markets, replaced by the speed, efficiency, and more lucrative career pipelines of business school. This is not to say that a J.D. suddenly became an irrelevant degree. On the contrary, elite law schools continued to produce top-flight entrants into financial careers, and prominent CEOs continued to boast a law degree as part of (if not the centerpiece of) impressive educational resumes. Additionally, the perceptions regarding the intellectual rigor of law school, the social value of legal work, and the job security of working at a large law firm all remained largely unchanged. But let it be said that despite escalating associate salaries, “white shoe” law firms and elite law schools were losing young talent at a fairly alarming rate to their MBA counterparts.

One outcome of this change is that the JD/MBA saw an increase in popularity. Many law students with an interest in finance and the desire for increasingly lucrative careers began to see the more generous returns attached to an MBA and pursued joint degrees to gain entree into lofty markets and firms. Now, that pendulum may swing the other way. The JD/MBA continues to grow in popularity – evidenced by the addition of a three-year Penn Law/Wharton program at the University of Pennsylvania – as students desire to gain more flexibility with regards to their job prospects. However, whereas previously the MBA was primarily added to bolster career prospects and open doors for the JD, now the JD may bolster career prospects and provide job security for the MBA. Attorneys fees will always be the last budget item to be cut and therefore provides more stable career prospects for elite applicants. Pairing a law degree to a high profile MBA is likely to be the most surefire way to safeguard one’s educational investment.

Of course, traditional MBA applicants may decide to forgo business school altogether and instead pursue a JD as a sole professional degree. A law degree – particularly from an elite program – can provide young professionals with exposure to any conceivable financial instrument and remains a proven and reliable method for securing high paying positions with great job security and encouraging executive prospects. (Once you are an executive, you won’t have to worry either way – there will always be a bailout if things go wrong!)

For all of these reasons and more, Veritas Prep decided early in 2008 to add law school admissions consulting and JD/MBA admissions consulting to the Veritas Prep slate of
offerings. Given the popularity of joint degree programs and the natural convergence of law school and business school as mutually beneficial and similarly attractive options for elite young professionals, it is imperative that business school companies afford traditional MBA clients with all of the advice, tools, and services – including law school advice, tools, and services – that are necessary to succeed. This is true now more than ever.

Issue #4 – Knowledge is power. The first three issues in this post have focused on the primary concerns facing business school (and, yes, law school) applicants: how the bailout impacts a client’s application process, job prospects, and educational choices. These issues have been posited in order of most to least pressing, but they all belong to the family of “concepts that effect the bottom line.” Issue #4 is more esoteric, but no less important. Because if this bailout means anything, it means that young people need to be more informed. When this $700 billion allocation is rubber stamped and doled out, it will bring the grand total of bailout money, subsidies, stimulus packages, and war spending to a total of nearly $1.6 trillion dollars … in 2008 alone. Few can deny that much of this has been necessary, but the fact that it has occurred with so little debate, so little oversight, and so little care is, frankly, outrageous. And what has been lacking – even more than common sense – is the outrage. Outrage from young people, who are standing by as the old guard spends tomorrow’s money to bail out bad investments, business practices, and regulation. Politically connected insiders breathe a sigh of relief as they receive taxpayer subsidized bonuses, subject to none of the “claw back” provisions required by even the most rudimentary of phantom bankruptcy schemes (or corporate reorganizations, or workouts, or whatever phrase you prefer) that should always accompany a financial rescue effort of this magnitude.

Part of the reason that so few are outraged is that they lack knowledge. Absorbing what is reported is only so helpful without a toolkit to understand the underlying principals – both the unavoidable principals that necessitate our government’s choices (the U.S. economy does need this latest bailout, for instance), as well as the principals that are being violated by the United States government’s methods of implementation. Such a toolkit is available in business school and in law school. Now, more than ever, attending an elite professional program is about receiving an advanced graduate school education, not just an advanced graduate school degree. For a long time, the analysis of whether to attend an MBA program, or go to law school, or attend med school, or any other grad program, has started and concluded with an examination of the career prospects and rate of return embedded in each pursuit. This bailout signifies a sea change on that front. Getting an MBA or a JD is about more than a degree and an eventual job. It is about building a knowledge base and a skill set to understand a rapidly changing world … and then being equipped to do something about it.